Whatever Happened to the Contract with America?

Six months ago my Chairman's Message was entitled "A Good Start on the Contract." As it has turned out, that has proved correct only for the House. As Speaker Gingrich promised last fall, all provisions in the contract were brought to a floor vote in the House, albeit with some modifications, in the first 100 days of the new Congress. Moreover, all but one of the contract provisions were approved by the House; the one exception was the proposed constitutional amendment on congressional term limits.

As of the dog days of August, however, most of the contract was stalled in the Senate. Three contract provisions passed the Senate without much controversy: one that makes Congress subject to the same laws that apply to other employers, one that provides some protection against new uncompensated mandates on state and local governments, and one that sets a governmentwide paperwork reduction goal. The proposed balanced-budget amendment, however, failed to pass the Senate by one vote. And the rest of the contract is in limbo.

What happened? First, the Senate is expected to be more deliberative than the House, and controversial measures must be approved by three-fifths or more of the members. More important, the contract was a commitment by House Republicans, not by their colleagues in the Senate; some of the Senate committee chairmen, specifically, have little enthusiasm for reducing federal spending, taxes, and regulation. The budget and other priorities have also delayed resolution of the remaining contract measures. And the 104th Congress has a lot of time left to address measures that need not be resolved in the fiscal year 1996 budget.

The most important step to restore the momentum of the contract is to approve a strongly restrained budget. On that issue, I am moderately optimistic. The nearly unanimous Republican support for a balanced-budget amendment was sufficient for approving a budget resolution that would balance the budget by 2002. The resolution also authorized some tax reduction on condition that spending reductions are forecast to be sufficient to balance the budget.

The two programs that most jeopardize the budget resolution are defense and Medicare. In a world where the United States has no major potential adversary, the Republicans propose to add to the Clinton defense budget; they make a good case for accelerating the development of a continental missile defense, but there is no case for increasing spending for such high- tech pork as the B-2, the Seawolf submarine, and the C-17. On Medicare, the Republicans have deceived themselves that the growth of spending can be substantially reduced without reducing benefits or the eligible population. Welfare reform will also be addressed as part of the budget, but the major remaining controversies involve the federal conditions for eligibility rather than the amount of spending. The Republicans' commitment to fiscal responsibility will be severely tested in the next two months as they develop the budget reconciliation bill and respond to the threatened Clinton vetoes.

Congressional resolution of the other major contract measures bearing on crime, regulatory reform, legal reform, and even tax cuts can be deferred without much cost. On those issues, Congress is best advised to do it right rather than quickly, in part because some of the House proposals are seriously flawed. The crime bills further increase the federal role in issues that should be left to the states. The regulatory reform bill places an unrealistic burden on the courts. The product liability bill unnecessarily federalizes an issue that is better resolved by state legislatures and the common law. The several proposals for tax cuts should probably be addressed as part of a broader tax reform and only after it is clear that the budget is on a path to balance.

In summary, some of the provisions of the Contract with America will not be approved this year or, maybe, ever. In some cases, that will be unfortunate; in other cases, not. The House Republicans deserve credit for developing and approving an ambitious if somewhat inconsistent agenda of first steps toward restoring limited constitutional government. They and their Senate colleagues should now be judged by their next steps.

William Niskanen is chairman of the Cato Institute.